UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2002
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File No.: 0-33213
MAGMA DESIGN AUTOMATION, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
77-0454924 | |||
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
2 Results Way
Cupertino, California 95014
(Address of principal executive offices)
Telephone: (408) 864-2000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
On February 6, 2003, 31,170,114 shares of Registrant’s Common Stock, $.0001 par value were outstanding.
FORM 10-Q
QUARTERLY PERIOD ENDED DECEMBER 31, 2002
INDEX
| Page | ||||
| Part I: |
1 | |||
| Item 1: Financial Statements |
1 | |||
| Unaudited Condensed Consolidated Balance Sheets at December 31, 2002 and March 31, 2002 |
1 | |||
| 2 | ||||
| 3 | ||||
| Notes to Unaudited Condensed Consolidated Financial Statements |
4 | |||
| Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | |||
| Item 3: Quantitative and Qualitative Disclosures About Market Risk |
27 | |||
| Item 4: Controls and Procedures |
27 | |||
| Part II: |
28 | |||
| Item 1: Legal Proceedings |
28 | |||
| 28 | ||||
| Item 5: Other Information |
28 | |||
| Item 6: Exhibits and Reports on Form 8-K |
29 | |||
| 30 | ||||
| Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31 | |||
| 31 | ||||
| 32 | ||||
| 33 | ||||
i
ITEM 1: FINANCIAL STATEMENTS
MAGMA DESIGN AUTOMATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| December 31, 2002 |
March 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
96,228 |
|
$ |
78,478 |
| ||
| Short-term investments |
|
— |
|
|
13,468 |
| ||
| Accounts receivable, net |
|
16,854 |
|
|
17,601 |
| ||
| Prepaid expenses and other current assets |
|
1,555 |
|
|
1,327 |
| ||
| Total current assets |
|
114,637 |
|
|
110,874 |
| ||
| Property and equipment, net |
|
6,296 |
|
|
7,252 |
| ||
| Other assets |
|
4,043 |
|
|
1,583 |
| ||
| Total assets |
$ |
124,976 |
|
$ |
119,709 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
1,368 |
|
$ |
1,777 |
| ||
| Accrued expenses |
|
7,315 |
|
|
9,441 |
| ||
| Deferred revenue |
|
14,092 |
|
|
15,617 |
| ||
| Total current liabilities |
|
22,775 |
|
|
26,835 |
| ||
| Other long-term liabilities |
|
95 |
|
|
130 |
| ||
| Total liabilities |
|
22,870 |
|
|
26,965 |
| ||
| Commitments and contingency |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred Stock, $.0001 par value; 5,000,000 shares authorized and no shares issued and outstanding |
|
— |
|
|
— |
| ||
| Common stock, $.0001 par value; 150,000,000 shares authorized and 31,095,325 and 30,239,786 shares issued and outstanding at December 31, 2002 and March 31, 2002, respectively |
|
3 |
|
|
3 |
| ||
| Additional paid-in capital |
|
227,299 |
|
|
223,450 |
| ||
| Deferred stock-based compensation |
|
(2,232 |
) |
|
(7,161 |
) | ||
| Notes receivable from stockholders |
|
(2,005 |
) |
|
(1,936 |
) | ||
| Accumulated other comprehensive income |
|
227 |
|
|
— |
| ||
| Accumulated deficit |
|
(121,186 |
) |
|
(121,612 |
) | ||
| Total stockholders’ equity |
|
102,106 |
|
|
92,744 |
| ||
| Total liabilities and stockholders’ equity |
$ |
124,976 |
|
$ |
119,709 |
| ||
See accompanying notes to unaudited condensed consolidated financial statements.
1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| For the Three Months Ended December 31, |
For the Nine Months Ended December 31, |
|||||||||||||||
| 2002 |
2001 |
2002 |
2001 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Licenses |
$ |
17,243 |
|
$ |
12,257 |
|
$ |
45,310 |
|
$ |
25,831 |
| ||||
| Services |
|
1,426 |
|
|
1,630 |
|
|
9,253 |
|
|
4,293 |
| ||||
| Total revenue |
|
18,669 |
|
|
13,887 |
|
|
54,563 |
|
|
30,124 |
| ||||
| Cost of revenue |
|
2,744 |
|
|
2,027 |
|
|
8,916 |
|
|
5,684 |
| ||||
| Gross profit |
|
15,925 |
|
|
11,860 |
|
|
45,647 |
|
|
24,440 |
| ||||
| Operating expenses: |
||||||||||||||||
| Research and development |
|
4,299 |
|
|
4,542 |
|
|
14,077 |
|
|
13,479 |
| ||||
| Sales and marketing |
|
6,113 |
|
|
5,688 |
|
|
19,027 |
|
|
16,610 |
| ||||
| General and administrative |
|
3,938 |
|
|
1,418 |
|
|
8,269 |
|
|
4,123 |
| ||||
| Restructuring costs |
|
727 |
|
|
— |
|
|
727 |
|
|
— |
| ||||
| Amortization of stock-based compensation* |
|
1,477 |
|
|
2,301 |
|
|
4,112 |
|
|
4,606 |
| ||||
| Total operating expenses |
|
16,554 |
|
|
13,949 |
|
|
46,212 |
|
|
38,818 |
| ||||
| Operating (loss) |
|
(629 |
) |
|
(2,089 |
) |
|
(565 |
) |
|
(14,378 |
) | ||||
| Interest income (expense): |
||||||||||||||||
| Interest income |
|
419 |
|
|
299 |
|
|
1,447 |
|
|
519 |
| ||||
| Interest expense |
|
(42 |
) |
|
(100 |
) |
|
(45 |
) |
|
(186 |
) | ||||
| Interest expense—subordinated convertible promissory notes |
|
— |
|
|
(14,078 |
) |
|
— |
|
|
(14,604 |
) | ||||
| Interest income (expense), net |
|
377 |
|
|
(13,879 |
) |
|
1,402 |
|
|
(14,271 |
) | ||||
| Net income (loss) before income taxes |
|
(252 |
) |
|
(15,968 |
) |
|
837 |
|
|
(28,649 |
) | ||||
| Provision for income taxes |
|
(80 |
) |
|
(61 |
) |
|
(411 |
) |
|
(151 |
) | ||||